Vodafone makes whoopee at network sharing concessions

POSTED BY Global Administrator
This morning’s announcement that Vodafone and Telefonica will now be sharing their mobile infrastructure across a number of markets can in some ways be viewed as the network operators’ first concrete response to the UK government’s interim report on Digital Britain, published at the end of January.

Tucked inside the report (Action 6 (d), to be precise), was the following snippet of information:

“…the Government and Ofcom will consider further network sharing, spectrum or carrier-sharing proposals from the operators, particularly where these can lead to greater coverage and are part of the mobile operator’s contribution to a broadband universal service commitment”

 You remember that joyous cacophony of whoops and cheers you heard coming from Newbury at the back end of January? Well, that was the Vodafone executives getting to Action 6 (d).

Yes, I know that network sharing is nothing new – witness the T-Mobile/3 UK deal back in late-2007 - but many governments have tended to frown upon it as being deeply anti-competitive and something only to be permitted in extremis. When, in the immediate aftermath of the 3G licensing back in 2000/2001, a number of operators (most still physically shaking from handing over multi-billion pound/euro cheques for their 3G licences) tentatively raised the question of infrastructure sharing, they were peremptorily slapped down and directed to EC Treaty Article 81 (which prohibit agreements “which have the object or effect of preventing, restricting, or distorting competition”). And so precious little infrastructure sharing took place, infrastructure vendors made a lot of money very quickly, and the network operators increased the size of their overdrafts.

Now, however, priorities have changed. Firstly, green issues have become exceedingly important to governments of all political persuasions, not necessarily because of any ideological shift amongst their members but because they feel that if they’re not seen to be doing something constructive about an issue which is perceived to matter to the public, then come the next election they’ll be out on their ear. And cutting the number of required masts is a very visible, and achievable, aim in this respect.

The second point is that governments have also twigged, somewhat belatedly, that we have a recession on our hands and that network operators are laying people off like everybody else. And the line of reasoning goes thus: if they can share networks, then they won’t have to spend so much money; and if they don’t have to spend so much money, they won’t have to lay more people off; and if they don’t have to lay more people off, well, come the next election we might just squeak in.

Hence Article 6 (d), and hence the whoops and cheers…